Russian Press - Behind the Headlines, December 18

Russia to Use Military for Deep-Water Geological Exploration in the Arctic/ Capital Flees Customs Union Member Countries/ No Changes to Visa Policy Expected After Russia – EU Summit

MOSCOW, December 18 (RIA Novosti)

Izvestia

Russia to Use Military for Deep-Water Geological Exploration in the Arctic

Soon after the New Year, Defense Minister Sergei Shoigu will consider proposals for using the equipment and personnel of the Defense Ministry’s Main Deep-Water Exploration Directorate (GUGI) for geological prospecting on Russia’s Arctic shelf.

According to Jane’s, GUGI, one of the Defense Ministry's most secret directorates, has at its disposal four nuclear deep-water stations, including the Project 1083 Losharik submarine, two deep-water bathyscaphs, The Rus and The Consul, and the BS-136 carrier submarine Orenburg.

If the proposals are endorsed, GUGI will provide The Losharik, its twin The Nelma, and The Rus. Exploration projects may also involve the civilian craft, The Mir, which has been recently loaded on GUGI’s state-of-the-art ship The Yantar.

The military claim that GUGI is the only organization in Russia prepared to operate at depths in excess of 2,000 meters. Last fall, The Losharik, jointly with two civilian drilling ships, lifted rock samples from the sea bottom proving that the Lomonosov Range was an extension of the Russian continental shelf.

According to a source in the Russian General Staff, GUGI will conduct scientific investigations for the government in order to stake out a claim for the Arctic sectors in the face of an upcoming international controversy and will take part in mineral extraction in the interests of public and private energy companies.

A spokesman for the Russian Navy added that GUGI would also help lift two nuclear submarines, K-27 and K-159, which were sunk in 1982 and 2003, respectively.

These missions are a far cry from what GUGI was doing during the Cold War years, when it monitored NATO’s SOSUS sonar line lying between Greenland, Iceland and Britain at depths ranging from 2,000 to 4,000 meters. The sonar barrier was supposed to detect and intercept Soviet submarines heading for open sea expanses from bases in the Murmansk Region.

A source in the Russian Defense Production Complex said it was inexpedient to use GUGI equipment for scientific exploration and mineral extraction. On the other hand, they are the world experts in manned deep-water investigations and the training of their crews is on the same level as that of cosmonauts. If we don’t find a job for them, Russia is likely to lose this highly skilled workforce, he said.

Chief Engineer at Sevmorgeo, Russia’s civilian geological prospecting company, Yury Kuzmin said that the military were capable of performing only a limited range of tasks in the Arctic Ocean. They are not geologists, while underwater geological exploration requires highly specific skills. But their submarines could direct the company’s drilling ships to promising locations, he added.

Kommersant

Capital Flees Customs Union Member Countries

Despite regulators’ efforts, billions of US dollars are fleeing the Customs Union countries – Russia, Belarus and, recently, Kazakhstan. Since there is no common database of goods turnover, Russian banks have been tasked with monitoring capital export from these countries.

The Russian Central Bank has instructed Russian banks to focus on the transfer of payments for goods imported by Russian residents from Belarus and Kazakhstan to third parties in foreign jurisdictions. The regulator writes in Letter 167-T that it has doubts about the authenticity of the certificates of origin of imports from Belarus and Kazakhstan and fears that this scheme is being used to withdraw capital from Russia for purposes of “tax evasion and money laundering.” In 2010-2011, the scheme involved only imports from Belarus. Imports from Kazakhstan came into play only once the regulator had clamped down on imports from Belarus, said a source with information about the bank’s policy.

The letter notes that this fraud scheme is being used regularly and in increasing amounts.

The bank’s experts assessed the damage caused by the Belarusian scheme in 2010 at tens of billions of dollars. “The volume of suspect imports from Belarus has decreased, while suspect imports from Kazakhstan have increased,” said the chief of internal security at one of Russia’s top 100 banks.

Customs Union countries can use a simplified procedure for goods turnover between them, providing delivery slips instead of freight customs declarations. The recommendation to banks to focus on such transactions corresponds to the risk-based approach (RBA), which was recently adopted by FATF, market players say. “In other words, the regulator indicates the groups of high-risk transactions for the banks to focus on. This departure from total control is part of the global trend,” said Alexander Naumov, chairman of the Committee on AML/CFT and Compliance Risks at the National Payment Council.

Experts and market players say that it will be more difficult to use the Central Bank’s new recommendations in relations with Kazakhstan than with Belarus. “The Belarusian National Bank has a database of delivery slips, while Kazakhstan doesn’t. There were plans to create a common database for the Customs Union, but it has not been done so far,” Naumov said. Russian banks will need to request customers to provide additional papers confirming the export of goods from the Customs Union territory, their storage, etc.

Many banks will not do this because there are no effective methods of monitoring imports from Kazakhstan. “The Central Bank’s money laundering recommendations are actually a firm requirement,” a banker said. “We will most likely stop making such transactions to prevent damage to ourselves.”

However, not all banks will do this, so the Central Bank’s letter will not resolve the problem, experts say. The best thing would be to create a common database of delivery slips for the Customs Union member countries. At this stage only the governments of the three countries have the power to create such databases.

Vedomosti

No Changes to Visa Policy Expected After Russia – EU Summit

Moscow is insisting on a relaxed visa regime for special passport holders but the EU is strongly against it and is stalling over other controversial suggestions.

At the Russia – EU Summit which opens next Friday in Brussels, Vladimir Putin will discuss issues that have been on the agenda for a number of years now. They include relaxing visa regulations and the possibility of visa-free travel, human rights and energy cooperation – all of which were last discussed at the summit in June in St. Petersburg, without success. European diplomats do not expect any progress this time either.

For over a year, there have been talks about relaxing the visa rules for business people, students and journalists. Service passport holders remain a disputed category. Russia initially planned to set individual rules with every EU member. But when regulations for other categories were agreed, Russia insisted on applying the rules to service passport holders as well. Now all categories are being held hostage.

A Russian diplomat familiar with the course of negotiations believes the EU would benefit from visa-free travel for service passport holders (there are currently 12,000 such holders in Russia and 150,000 in the EU). EU representatives suggest relaxing visa rules for all other categories as proposed earlier and continuing the discussions over service passport holders. Whatever the outcome at the Brussels summit, the lack of progress has already resulted in Russia introducing visas for airplane crews.

The issue was first raised in 2003. Russia is hoping for a change to the visa policies ahead of the Sochi Olympic Games. The EU prefers not to rush the matter, but to work through joint steps to lead to the eventual abolition of visas.

This year, two expert groups have studied the issuing of travel documents in Russia and the work of border officials. Two more missions are planned in order to dismiss EU members' skepticism about visa-free travel. However, Russia has accused the EU of turning human rights and corruption into political issues. In turn, the EU is insisting that corrupt practices be eliminated from the issuing of foreign passports and border crossing procedures.

The general political situation is not very conducive to progress at the time but there have been some positive developments. The visa regime talks could be completed next year. The dialogue in the sphere of energy is now in its active phase and there are signs both parties are willing to compromise to comply with the Third Energy Package.

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